Queensland resources loves locals, reaps rewards

The Queensland resources sector has splashed an increasing amount of cash on local suppliers in recent years, with local expenditure rising $4 billion from 2019 to 2020.

This November, the Queensland Resources Council (QRC) released its 2020 Code Effectiveness Report to measure the performance of the Queensland Resources and Energy Sector Code of Practice for Local Content.

The Code was developed in 2013 by the State Government to encourage local industry participation in major projects, with the three years to 2021 seeing the most positive results thus far.

QRC chief executive Ian Macfarlane said resources companies were continuing to warm to the idea and benefits of local suppliers, especially in the wake of the pandemic.

“This ‘local first’ approach is strongly advocated by the Queensland Local Content Leaders’ Network, of which the QRC is a member, and it’s amazing to see the steady stream of cost savings, innovations and good ideas now flowing back to our companies through better engagement with suppliers,” Macfarlane said.

Local expenditure rose from $22.4 billion in 2018-19 to $26.7 billion in 2019-20, an increase of almost 20 per cent.

The highest years of local expenditure (since 2009) were 2011-12 and 2012-13 when the Queensland resources sector purchased $31 billion in local goods and services two years running.

More positively, however, the almost $27 billion spent in 2019-20 was the third consecutive year of growth – up $11 billion since 2016-17 – marking the longest string of growth on record.

Macfarlane said sector leaders were reporting a number of benefits as a result of the expenditure.

“Sixteen per cent of CEOs said Queensland suppliers had improved their price competitiveness, with none reporting a decrease in this category, and 44 per cent said they expect to spend more with local suppliers over the next 12 months, and none expected to spend less,” he said.

“This is fantastic news and shows the resources sector’s focus on building the capability of local supply chains is delivering more opportunities for Queensland suppliers than ever before, with more growth to come.”

Sourcing goods and services locally also reduced these companies’ transport costs and reduced supply chain risks posed by events such as the pandemic.

In comparison to the jump in local expenditure, the Local Content Report also found that internationally-sourced goods and services recorded a drop of $600 million from 2018-19 to 2019-20.

This represented a fall of more than 50 per cent, from $1.1 billion down to $500 million.

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